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UNIDO “disappointed” by UK intention to withhold funding

VIENNA, 1 March 2011 – The Director-General of the United Nations Industrial Development Organization (UNIDO), Kandeh K. Yumkella, said today he was “disappointed” by the intention expressed by the United Kingdom to withhold funding from the Organization and other U.N. agencies.

The decision was based on a recent review of the Organization conducted by the Department for International Development (DFID). On Monday, Yumkella discussed the matter with Alan Duncan, MP, Minister of State for International Development, and presented a formal reply to the DFID assessment.

“I am disappointed by the intention expressed by the UK to withhold funding from UNIDO – not only because of our partnership to date, but also because the DFID review contains inaccuracies which are material to the conclusion reached,” said Yumkella.

“Partnership with the United Kingdom has been important to UNIDO as an institution. We have worked together on programmatic activities and in driving forward reform to produce better results for those we serve. Indeed, among United Nations agencies, few have been more conscious of the need for value for money than UNIDO.”

In the review, DFID found that UNIDO plays a positive role in supporting wealth creation and in country-level interventions in support of its norms and standards role. It rated the Organization well in terms of leadership; reform; cost and value consciousness; and partnership with governments, other UN agencies and the private sector. The review also found that the Organization’s change management programme is likely to lead to further improvements. However, DFID justified the decision on the basis that UNIDO’s activities are of limited “size and niche” to meet DFID’s development objectives.

Yumkella emphasized that there were several shortcomings in the DFID review which led to the ultimate conclusion reached. “Unfortunately, the review overlooks much of UNIDO’s contribution to the international development goals, and some of its negative findings with regard to UNIDO’s organizational strengths are inaccurate. This may in part be because no fact-finding visit to UNIDO headquarters or field operations took place in the course of the review,” he said.

In an official reply to DFID, UNIDO also noted that a wide range of developmental services provided by the Organization have not been given due consideration in the review. These include, in particular, UNIDO’s services to post-crisis recovery and rehabilitation in fragile States, including Afghanistan and Iraq, the countries of the Mano River Union and Southern Sudan.

UNIDO is one of the most reformed UN agencies, and has been consistently commended for this by Member States, including the UK. In its 2005 Multilateral Effectiveness Framework, DFID ranked UNIDO highest among standard-setting agencies. It has shed more than fifty percent of its staff, has pegged its budget to zero real growth, and yet has doubled its technical cooperation delivery. In 2010, UNIDO’s total portfolio of technical cooperation activities amounted to USD 385.5 million.

There has been a groundswell of support for UNIDO from Member States as well as from partners. The African Union (AU) and others have voiced their dismay and their belief in the relevance of UNIDO to economic integration and development in their regions. “The importance to the African Union of collaboration with UNIDO cannot be overemphasized,” said an AU Aide Memoire.

“A key current example is UNIDO’s assistance in creating two major frameworks on industrialization, now at the centre of African Union policy and of joint African Union – European Union strategy.”

The AU statement also noted that the UNIDO’s Industrial Development Report, "Breaking in and moving up: New industrial challenges for the bottom billion and the middle-income countries", which was authored by Paul Collier and launched at DFID headquarters in 2009, was an important source of information for leaders looking ahead to economic transformation.

The Organization has also been consistently commended for its work in supporting the elimination of substances that deplete the world’s protective ozone layer and reducing the emission of greenhouse gases that cause climate change. In seven of the past nine years, UNIDO has been rated by the Multilateral Fund (MLF) as the most effective of the four implementing agencies of the Montreal Protocol, coming second in the other two years.

The UK’s assessed contribution to UNIDO, which is reported as 100 per cent official development assistance (ODA), amounts to approximately EUR 7.2 million per annum. This represents about 9 per cent of UNIDO’s regular budget, but only 0.08 per cent of overall UK ODA.

Yumkella noted that UK’s decision will not become operational until 31 December 2012, adding: “I still hope that the UK will review its decision but if it does go through, we will continue to engage with the Government and DFID in the hope of renewing our partnership at a later stage.”